Agenda and minutes

An apology for absence was received from David Hughes, Director of Audit, Fraud, Risk and Insurance.  Sharon Lea, Chief Executive, was attending remotely.

The Chair took the opportunity to welcome Charlotte Moar, the newly appointed Independent Member of the Committee.

If a Councillor has a disclosable pecuniary interest in a particular item, whether or not it is entered in the Authority’s register of interests, or any other significant interest which they consider should be declared in the public interest, they should declare the existence and, unless it is a sensitive interest as defined in the Member Code of Conduct, the nature of the interest at the commencement of the consideration of that item or as soon as it becomes apparent.

At meetings where members of the public are allowed to be in attendance and speak, any Councillor with a disclosable pecuniary interest or other significant interest may also make representations, give evidence or answer questions about the matter.  The Councillor must then withdraw immediately from the meeting before the matter is discussed and any vote taken.

Where Members of the public are not allowed to be in attendance and speak, then the Councillor with a disclosable pecuniary interest should withdraw from the meeting whilst the matter is under consideration. Councillors who have declared other significant interests should also withdraw from the meeting if they consider their continued participation in the matter would not be reasonable in the circumstances and may give rise to a perception of a conflict of interest.

Councillors are not obliged to withdraw from the meeting where a dispensation to that effect has been obtained from the Standards Committee.

There were no declarations of interest.

To approve the minutes and exempt minutes of the meeting held on 9 June 2025 as an accurate record.

Exclusion of the public and press

The Committee resolved, under Section 100A (4) of the Local Government Act 1972, that the public and press be excluded from the meeting during the consideration of the exempt minutes, on the grounds that they contained the likely disclosure of exempt information, as defined in paragraph 3 of Schedule 12A of the said Act, and that the public interest in maintaining the exemption currently outweighed the public interest in disclosing the information.

The Committee held further discussions in private session after the open meeting.

RESOLVED

The minutes and exempt minutes of the meeting held on 9 June 2025 were agreed as an accurate record.

This report presents the London Borough of Hammersmith & Fulham’s 2024/25 Statement of Accounts, including the Pension Fund Accounts and Annual Governance Statement for approval.

Councillor Rowan Ree (Cabinet Member for Finance and Reform) remarked that an important part of good governance of a borough was to publish its annual statement of accounts and subject them to scrutiny.  He said the audit reports of this council in previous years and the reviews by LGA peers earlier this year had provided a lot of reassurance to residents and stakeholders that the London Borough of Hammersmith and Fulham (LBHF) was a well-run borough with well-managed services delivered in a ruthlessly, financially efficient manner. He thanked the hard work of officers and cabinet members in managing the budget effectively over the course of each year, and the efforts of Grant Thorton (GT), the External Auditor, in going through the accounts thoroughly and providing the assurance.

Sukvinder Kalsi (Executive Director of Finance & Corporate Services) highlighted the extensive range of services provided by the council to its residents and the complexity of its finances which were prescribed by all manner of regulations and legislation. It was therefore important to provide complete assurances to LBHF’s residents, business and visitors that the finances of this authority were well-run.  Sukvinder noted that GT’s anticipated financial statements audit report opinion would be unmodified, and there were some minor recommendations. He said that some adjustments in terms of the records of some debtors and creditors had been made which however would not affect any of the figures set out in the statement of accounts.  He extended his thanks to GT for their absolutely thorough efforts as reflected in the number of queries received and reviewed by the Finance Office.

Paul Cuttle (Key Audit Partner, Grant Thornton) outlined Grant Thornton UK LLP Audit Findings Report (ISA260) (Main Financial Statements 2024/25) (Appendix 2) which was driven by various standards that all auditors, including GT, were required to work to. He said that the document linked well to the External Auditor’s Plan presented to this Committee earlier this year. Paul noted that GT’s work was substantially complete, and the final set of accounts and representation letters would soon be signed off which shall put LBHF in a strong position ahead of most London councils which all started the auditing work at a similar time. Paul highlighted the positive experience working with LBHF that its draft set of accounts provided were of a good quality, noting some expected adjustments made in the review process.  He stressed that there was no concern that would challenge GT’s conclusion to issue a qualified opinion. This council demonstrated again the amount of hard work it had undertaken to complete the work, just like the previous efforts of clearing the backlog by completing five sets of accounts in two years. 

Paul Cuttle continued to introduce the Grant Thornton UK LLP Audit Findings Report (ISA260) (LBHF Pension Fund 2024/25) (Appendix 3) and the two Draft Letter of Representation 2024/25 (Appendices 4 & 5). He remarked it was a good experience in auditing the pension fund accounts and the report would soon be signed off after clearing  ...  view the full minutes text for item 4.

This report presents the external auditor’s Interim Annual Audit Report concerning the Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources (commonly known as “Value for Money” reporting). The report covers the financial year 2024/25.

Councillor Rowan Ree (Cabinet Member for Finance and Reform) highlighted that this report summed up well the efforts of LBHF in making sure its services were delivered in a ruthlessly, financially efficient manner.

Sukvinder Kalsi (Executive Director of Finance & Corporate Services) said that the auditor was required to review the Council’s value for money arrangements in the areas of Financial Sustainability, Governance and Improving Economy, Efficiency and Effectiveness.  He was pleased to note that the overall assessment by the auditor against the five criteria was Green or Amber (page 422), which should give residents and businesses assurance that the council’s finances were being well-governed.

Paul Cuttle (Key Audit Partner, Grant Thorton) introduced the Annual Auditor’s Report on Hammersmith and Fulham Council 2024/25 (Appendix 1) and highlighted

Auditor’s various responsibilities in terms of its value for money work. He referred to a range of different recommendations that could be raised by GT, including statutory recommendations, key recommendations and improvement recommendations (page 469).  He then elaborated that statutory recommendations used to be rare but they were now more common which reflected some of the issues within the sector. There were a couple of key recommendations relating specifically to the Housing Revenue Account (HRA) and a lot of work had been carried out in those areas in the past 12 months which made them no longer a significant weakness in their value for money arrangements.  On improvement recommendations, there were a few with some having an amber rating but none had particular concerns.  Paul reiterated that this value for money report was very positive and reflected very well on the council’s financial sustainability around the governance arrangements.

Councillor Lisa Homan sought clarification on the Improvement Recommendation 1 (page 445).  Sukvinder Kalsi explained that the recommendation was about reviewing the HRA budget and its 10-year financial plan to ensure they were based on pragmatic assumptions in terms of interest rates and inflation etc through conducting scenario planning, sensitivity analysis and stress testing.  The results would be set out in the report to be presented to the Cabinet in February 2026.

Councillor Homan referred to the financial reporting arrangements (page 453) and asked about improvements on the timeliness of some financial reporting.  Sukvinder Kalsi highlighted the internal governance and other processes which in his opinion were conducted in an optimised manner now.  He undertook to review these needed procedures to see if they could be further streamlined to reduce the timescale of reporting to the Cabinet.  James Newman (Assistant Director of Finance) noted that it was related to the current time-lag for the outturn report, which was much longer, and agreement had already been made to take that report to the Cabinet earlier.

ACTION: Sukvinder Kalsi

Noting the big drop of the HRA Reserves in 2024/25, Councillor Adrian Pascu-Tulbure was concerned about the liquidity position at about 50% which might affect the council’s sustainability over a long term.

Councillor Rowan Ree pointed out that monies were put in reserves for rainy days and the resources  ...  view the full minutes text for item 5.

This report sets out the Council’s Treasury Management Outturn for 2024/25 and is in line with the Council’s Treasury Management Strategy Statement (TMSS) (as approved by Council on 12 February 2024). The details are subject to external audit review in line with governance and regulatory requirements.

Mathew Dawson (Strategic Investment Manager) briefed members on the report, including Prudential Indicators, the challenging strategic financial environment in terms of the pricey long-term borrowing rates, the bank rate, the Council’s borrowings including those for the Housing Revenue Accounts (HRA), liquidity and balances, and cash flows from the investments. Mathew added that the mid-year report covering the first six months in 2025/26 would be brought to the next Committee meeting in December.

Sophie Green (Treasury Manager) took members through the tables on the allocation of interest paid and received during the year 2024/25 (para. 4), the split of investments by duration as of 31 March 2025 (para. 6) and a breakdown of the indicators and actual position for the year ending 31 March 2025 (para. 20). She said that the average return achieved on investments managed internally for the year was 5.22% compared with the average 7-day money market rate (uncompounded) of 4.91%.

Sukvinder Kalsi (Executive Director of Finance & Corporate Services) reassured the Committee that all treasury management was done in line with the Council’s Treasury Management Strategy Statement approved by the Council in February 2024.  He noted that all the Prudential Indicators had been met, and more interests were generated from cash balances than from those on debts.  He said the borrowing undertaken by the council was purely on the HRA and the debt level would be kept below 30% of the value of HRA’s stock.

Summing up, the Chair thanked officers’ good work in terms of investment and returns.

RESOLVED

That the Committee agreed to note the report.

The purpose of this report is to provide members of the Audit Committee with an update on risk management across the Council.

Moira Mackie (Head of Internal Audit) introduced the report.  She said that following a review of the Risk Management Strategy 2025- 2028 in March 2025, the Corporate Risk Register was refreshed to rationalise and consolidate some of the risks.  Having enhanced the understanding of the directors on the need to identify and manage the risks, the Corporate Risk Register was updated and presented to the Senior Leadership Team (SLT) on 1 October (please see page 485 and the heat map), and the update was on-going.  She added that the Corporate Risk Register would be presented with identified mitigation actions as this was one of the external auditor’s improved recommendations.

Councillor Callum Nimmo asked about the latest development around the Fair Funding Reform 2026/27 as there had been a lot of speculations. Sukvinder Kalsi (Executive Director of Finance & Corporate Services) responded that local authorities would not be notified of the grant funding for the next three years until around late November when the Chancellor delivered her budget speech. Nevertheless, Sukvinder said he hoped the central government would take a pragmatic and considered view about the excellent services provided by this council and continue to incentivise the LBHF with the needed resources which would be very well-manged, as evidenced by the external auditor’s findings earlier. Hopefully, the eventual proposals would just be slight modification, and the Committee could discuss this further at the next meeting in December.

Councillor Rowan Ree (Cabinet Member for Finance and Reform) highlighted that lots of behind-the-scenes work with lobbying groups of London councils and LBHF residents had been done to make sure that this borough would not be unfairly punished for its past hard work. He said LBHF’s contributions far exceeded the returns it received, for instance, in terms of business rates, growth generated through innovative industrial strategy etc.  He really hoped that this borough would be in the best possible position to continue to grow the economy for LBHF and across the country.

Councillor Adrian Pascu-Tulbure said he was glad to note there was cross-party aligned lobbying to make sure the LBHF had its fair share because it had done a lot. 

Charlotte Moar (Independent Member) referred to Risk 18 on management of complaints etc. and noted the combined inherent impact and inherent likelihood at the heat map remained at level 16 in November 2024, March and June 2025. She asked about the target date for the figure to come down to 12 or below, given the next annual complaints report might come up soon.

Sukvinder Kalsi highlighted the council’s intention to provide the best services without attracting any complaints. However, the council did go through a period of difficulty when its complaints arrangements were reviewed under the Housing Ombudsman P49 Report on Hammersmith and Fulham in March 2024.  In summer this year, the Ombudsman was satisfied with the progress and discharged the recommendations. Going forward, appropriate responses to complaints would be provided within the time scales and there would be regular focus on complaints  ...  view the full minutes text for item 7.

This report summarises the work of Internal Audit included in the 2025/26 Internal Audit Plan up to the end of August 2025.  Two audits have been finalised and both received positive assurance opinions.  Two further audits have been issued in draft and will be finalised on receipt of the management responses.

Moira Mackie (Head of Internal Audit) briefed members on the update which included

a couple of draft audits and a few in progress. As the Internal Audit Plan was evolving during the year, audits for new risks identified would be included in each update.  She highlighted the school audits which involved the engagement of the schools’ finance and governance teams in developing the audit plan according to school calendar. She said her team visited the schools and met with school staff who usually became more responsive and helpful after understanding the purpose of doing audits.  Moira added that those recommendations that were not yet implemented would be mapped on the report and follow-up work would be on-going until they were sorted. Their status would be set out clearly on the final report before it was signed off.

Charlotte Moar (Independent Member) welcomed the positive report. She referred to one of the Limited Assurance audits in the June report on “Client Affairs – Draft” which had not yet received the management response and asked about any progress, as set out in the June report, about their response on actions required to address the recommendations made.

In response, Moira Mackie said the relevant audit was re-visited shortly after the June meeting and the recommendations were all agreed. The team had also agreed with the Finance Team a schedule to carry out follow-up work in January and an update would be provided in the next progress report.

Noting the issue of staff turnover was one of the challenges faced by schools as indicated across several updates, the Chair was concerned about knowledge transfer in LBHF schools and academies during the transition.

Moira Mackie acknowledged the situation and noted that there were resources within the school finance team to support schools experiencing skill set issues and help them keep on top of things like running a deficit budget. She noted there were shared resources amongst schools where, say, a business manager might work for multiple schools across boroughs.  When the shared arrangements now became clearer, there were benefits as work of different audits could also be pooled under the same business manager.

Responding to the Chair’s further concern about sharing this best practice of shared resources, Moira Mackie reiterated the helpful sharing between business managers from different schools at the school business managers’ forum she had attended previously. She said the team was mindful of ensuring the schools operated with the best finance and governance arrangements and encouraged them to share resources.  For example, schools were encouraged to do independent reviews for each other without worrying about securing additional funds to meet the cost. 

On the Chair’s further question about whether the auditors of other local authorities also tied in their audit cycles with the school calendars, Moira Mackie noted that school audits used to be carried out once every 3 years which taking into account the on-going follow-up work was almost a continuous non-stop exercise. Now the school audits were held once every  ...  view the full minutes text for item 8.

To note the future dates of meetings:

·       1 December 2025

·       16 March 2026

·       8 June 2026

Members noted the dates of future meetings:

·       1 December 2025

·       16 March 2026

Proposed resolution:

The Committee is invited to resolve, under Section 100A (4) of the Local Government Act 1972, that the public and press be excluded from the meeting during the consideration of the following items of business, on the grounds that they contain the likely disclosure of exempt information, as defined in paragraph 3 of Schedule 12A of the said Act, and that the public interest in maintaining the exemption currently outweighs the public interest in disclosing the information.

Please see item 3.